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Need to move away from subsidies for cereals to pulses: Arvind Subramanian

LiveMint 05-06-2017Sayantan Bera

New Delhi: India’s agriculture policy needs a course correction by moving away from subsidies and support to cereals like rice and wheat and increase assistance to “less-loved” pulses and livestock sector, chief economic advisor Arvind Subramanian said on Monday, while addressing fellows of the National Academy of Agricultural Sciences in New Delhi.

“On the loving-cereals-too-much challenge, it will be politically impossible to reduce current levels of support,” Subramanian said, suggesting the government could provide direct support to farmers up to Rs1,00,000 per year instead of current subsidies on fertilisers, power and on support prices for cereals.

“On the other category of crops that are loved too little... policies can only seriously and sustainably be implemented if they—farmers in pulses, dairy, livestock, oilseeds etc. acquire more political voice to countervail other voices,” Subramanian said.

Despite efforts by the government to ramp up procurement of pulses like arhar (pigeon pea), an estimated 60% of the crop was sold at less than minimum support prices, the CEA said, adding export restrictions also led to low market prices.

On the dairy and livestock sector, Subramanian said that “if social policies impede the workings of the livestock market, the impact on the economics of livestock farming could be considerable”. These comments assume significance coming after a new rule imposed by the environment ministry (on 23 May) which prohibits trade in spent cattle for slaughter in livestock markets across the country.

“If social policies drive this terminal value (of unproductive cattle) precipitously down, private returns could be affected in a manner that could make livestock farming less profitable,” he said, adding, “This declining terminal value arises both because of the loss of income from livestock as meat and the additional costs that will arise from having to maintain unproductive livestock.”

Observing that the median income of a farm household in India is a meagre Rs1,600 per month, the CEA said “the truth is, it simply does not pay to be a farmer in India.”

India has to get its industrialization and urbanization right to help people move out of agriculture, Subramanian suggested.